Valentin Semenov / Eyeem | The eye Getty Images
While many taxpayers fear the tax season, Americans living abroad face even greater annual burdens – and they are frustrating enough that some want to relinquish their American citizenship.
Approximately 1 in 4 U.S. expatriates is “seriously considering” or “planning” to relinquish U.S. citizenship, according to study from Greenback Expat Tax Services.
The burden of filing U.S. taxes is the main reason immigrants want to renounce U.S. citizenship, according to a survey of 3,200 U.S. expats living in 121 countries.
More from Personal Finance:
How To Orient Yourself In College Learning And Help Your Balance 529 Recover
36% of employees who earn $ 100,000 or more live from paycheck to paycheck
High inflation is forcing some older Americans to make difficult financial choices
“You have people doing things that seem like normal things to them, like saving for retirement or buying a home,” said David McKeegan, co-founder of Greenback Expat Tax Services. “But when you do it abroad, sometimes you can get in a lot of trouble.”
U.S. expats have to pay annual U.S. income taxes on global profits, including their salaries, business profits, investment income, and more, which includes filing and paying taxes in two countries.
While the United States has measures to prevent double taxation, such as foreign exclusion of income and tax creditmany expats still oppose the double filing requirements due time commitment and costs to prepare these declarations. Moreover, nearly 80 percent do not think they have to pay taxes in the United States while living abroad, according to the survey.
You must file an FBAR if your combined account values exceed $ 10,000 at any time of the year, whether or not these accounts are revenue-generating.
For example, if you have $ 5,000 in a savings account and $ 4,750 in an investment account and the investment account jumps to $ 5,025 even in one day, you need to report these balances.
Penalties for non-provision depend on whether this is a “deliberate” or “unintentional” violation. However, intentional violations come with a fee of more than $ 129,210 or 50% of your account balance for each year with a missing form.
“It’s a headache for people when they get in trouble,” McKegan added.
Although there has been a sharp decline in Americans who relinquished their American citizenship in 2021 – 2,426 compared to a record 6,705 in 2020 – the figures for 2021 may have been lower due to the closure of US embassies in against the backdrop of the Covid-19 pandemic.
According to data abroad, in 2020 there were about 9 million US citizens estimates from the US State Department.
“What impressed me in this latest study is the number of people who think their concerns are less likely to be addressed than people who live in the United States,” McKegan said.
In fact, 86% of respondents believe that the US government is less likely to deal with their problems than state citizens, the survey found.